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Ten Percent Tariff Proposed on $200 Billion Worth of Imports from China

Thursday, July 12, 2018
Sandler, Travis & Rosenberg Trade Report

The Trump administration is proposing to further escalate its efforts to address concerns with China’s policies on intellectual property protection by imposing an additional ten percent duty on 6,031 tariff lines from China with an import value of approximately $200 billion. The full list of products that could be subject to this tariff is here.

(Click here for ST&R’s web page providing comprehensive information on all U.S. tariffs imposed under Section 301 and Section 232 as well as the retaliatory tariffs trading partners are levying on U.S. goods.)

Earlier this year the administration determined that China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation are unreasonable and discriminatory. In response, the U.S. began assessing an additional 25 percent tariff on $34 billion worth of Chinese goods effective July 6 and has proposed to extend that tariff to another $16 billion worth of imports from China at some yet-to-be-determined date. China has responded with identical measures.

U.S. Trade Representative Robert Lighthizer pointed out that these tariffs followed a “thorough” investigation under Section 301 of the 1974 Trade Act. By contrast, he said, China’s action is “without any international legal basis or justification.” Lighthizer claimed that pursuing higher tariffs on another $200 billion worth of Chinese goods is thus “an appropriate response … to obtain the elimination of China’s harmful industrial policies.”

However, the proposal was met with concern. Senate Finance Committee Chair Orrin Hatch, R-Utah, said it “appears reckless and is not a targeted approach.” House Ways and Means Committee Chairman Kevin Brady, R-Texas, said U.S. and Chinese leaders should “begin crafting an agreement that levels the playing field” between the two countries or risk “a long, multi-year trade war … that engulfs more and more of the globe.” The Retail Industry Leaders Association and the National Retail Federation said the tariffs would harm U.S. consumers, workers, and businesses.

According to Sandler, Travis & Rosenberg professionals in China, that country’s Ministry of Commerce reacted to the new tariff announcement by stating that Beijing will be forced to take necessary countermeasures. Since tariffs may not be the most feasible option, a CNBC article states that other possibilities include “delaying approvals of mergers and acquisitions involving U.S. companies, holding up licenses for U.S. firms and ‘delaying and ramping up’ inspections of American products at borders.” China also said it would immediately lodge an additional complaint with the World Trade Organization, though U.S. ambassador to the WTO Dennis Shea said “the WTO currently does not offer all of the tools necessary to remedy this situation.”

In the meantime, USTR will hold a public hearing Aug. 20-23 in Washington, D.C., to gather input on the proposed ten percent tariff. Requests to appear at the hearing, summaries of expected testimony, and pre-hearing submissions are due by July 27 and post-hearing rebuttal comments are due by Aug. 30. USTR is also accepting written comments through Aug. 17.

With such a large volume and value of imports from China subject to the proposed tariff, companies importing from China should act now to assess how it may impact their supply chains. If you think you  might be negatively affected, please contact Nicole Bivens Collinson at (202) 730-4956 or Kristen Smith at (202) 730-4965 to review the list and discuss options, alternatives, and actions that might be pursued to protect your interests.

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